SANDRIDGE REPORT: Both sides claim endorsement

By Adam Wilmoth | The Oklahoman

Sunday

Jun 10, 2018 at 1:30 PM

OKLAHOMA CITY (TNS) – SandRidge Energy Inc. and dissident activist shareholder Carl Icahn this week both have praised independent proxy advisory reports, claiming endorsements from the same set of recommendations.

Advisory firms Glass, Lewis & Co. and Institutional Shareholder Services Inc. both recommended SandRidge shareholders re-elect four incumbent SandRidge directors while also electing three Icahn nominees, a move that would allow the incumbents to retain control of the board while also giving Icahn significant influence.

“The ISS recommendation recognizes our board’s responsiveness, and the clear steps we have taken to serve the best interests of all independent SandRidge shareholders,” the incumbent directors said in a statement late Wednesday. “The recommendation clearly underscores the board’s belief that turning over control of the entire SandRidge Board to Carl Icahn employees and nominees would end the current impartial review process, drive away competition and position Icahn to consolidate control of SandRidge as cheaply as possible.”

While the two groups both recommended incumbents retain the majority of the board, they recommended different Icahn nominees. The two groups both endorsed John “Jack” Lipinski and Randolph Reed, but ISS also recommended Jonathan Christodoro while Glass Lewis supported Bob Alexander.

“Between ISS and Glass Lewis, the advisory firms have collectively endorsed four of the Icahn nominees,” Icahn said in a letter to shareholders released Thursday morning.

The SandRidge board has asked shareholders to re-elect the five incumbent directors and support two Icahn nominees who are not Icahn employees, Lipinski and Read. Icahn has called for shareholders to reject the entire board, instead replacing the five directors with a full slate of seven nominees of his choosing.

The vote is set to take place at the company’s annual meeting at 9 a.m. June 19 at SandRidge’s Oklahoma City headquarters.

The two proxy firms also had plenty of strong opinions about both SandRidge and Icahn.

One key point of conflict between SandRidge directors and Icahn is the company’s ongoing effort to consider third-party bids to partner with or buy the company. Icahn has said he will consider making an offer to buy the company if he gains control of the board. SandRidge directors have said the strategy is an effort to bypass the current bidding process.

ISS appeared to agree with the SandRidge board’s position.

“Given Icahn’s participation in the ongoing strategic review process, the election of current or recent Icahn employees to the board would present a clear conflict of interest and impact the board’s ability to run a fair, unbiased process that may result in selling the company to Icahn.”

The advising firm also said Icahn has been weak on details about how he would run the company if his nominees win.

“By failing to provide shareholders with a detailed disclosure of its go-forward plan, (Icahn) is asking shareholders to simply trust that, if granted a majority, it will do the right thing,” ISS stated. “Regardless of any assurances of a fair process, that level of trust would be easier to gain were it not for the fact that the dissident is actively participating in a process to potentially acquire the company.”

ISS also criticized the SandRidge board for poor communication following the company’s emergence from bankruptcy, especially regarding a now-abandoned plan to buy Colorado-based Bonanza Creek Energy.

ISS also recommended against the board’s proposal to extend a so-called poison-pill measure designed to slow Icahn’s efforts and recommended shareholders vote against the board’s plan for executive compensation.

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